OutlookAfter making a mark in the fabric industry, Siyaram has forayed into the readymade apparel segment. The company sells garments under the brands, ‘Oxemberg’ ‘J Hampstead’ and ‘Cadini’. The management is well on track to increase the proportion of garmenting in their overall revenues. In H1FY18, the garmenting segment reported robust revenue growth of 24% YoY to Rs 198 crore driven by 34% volume growth. The shift towards garmenting is visible as share of garments has increased from 16% in FY16 to 27% in H1FY18. With a strong fabric backbone, the company is well placed to forward integrate into the garmenting segment, which would yield higher margins. Going forward, we expect revenue and earnings to grow at a CAGR of 12% and 21%, respectively, in FY17-20E. Furthermore, we expect RoCE to improve to 20% by FY20E, from current 15%. Hence, we reiterate our BUY recommendation with a revised target price of Rs 655 (19.0x FY20E EPS of Rs 34.5).

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